Correlation Between Solution Advanced and Seah Steel

Can any of the company-specific risk be diversified away by investing in both Solution Advanced and Seah Steel at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Solution Advanced and Seah Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Solution Advanced Technology and Seah Steel Corp, you can compare the effects of market volatilities on Solution Advanced and Seah Steel and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Solution Advanced with a short position of Seah Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Solution Advanced and Seah Steel.

Diversification Opportunities for Solution Advanced and Seah Steel

-0.25

Correlation Coefficient

Solution Advanced  Seah Steel

Very good diversification

The 3 months correlation between Solution and Seah is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Solution Advanced Technology and Seah Steel Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seah Steel Corp and Solution Advanced is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Solution Advanced Technology are associated (or correlated) with Seah Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seah Steel Corp has no effect on the direction of Solution Advanced i.e., Solution Advanced and Seah Steel go up and down completely randomly.

Pair Corralation between Solution Advanced and Seah Steel

Assuming the 90 days trading horizon Solution Advanced Technology is expected to under-perform the Seah Steel. In addition to that, Solution Advanced is 1.18 times more volatile than Seah Steel Corp. It trades about -0.04 of its total potential returns per unit of risk. Seah Steel Corp is currently generating about 0.02 per unit of volatility. If you would invest  15,743,400  in Seah Steel Corp on October 5, 2024 and sell it today you would earn a total of  1,966,600  from holding Seah Steel Corp or generate 12.49% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Solution Advanced Technology  vs.  Seah Steel Corp

Solution Advanced

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Solution Advanced Technology has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Seah Steel Corp

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Seah Steel Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Seah Steel is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Solution Advanced and Seah Steel

The main advantage of trading using opposite Solution Advanced and Seah Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Solution Advanced position performs unexpectedly, Seah Steel can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Seah Steel will offset losses from the drop in Seah Steel's long position.

The idea behind Solution Advanced Technology and Seah Steel Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.